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TheStreet Open House

Syria Oil Industry Buckling Under Rebel Gains

By BASSEM MROUE

BEIRUT (AP) â¿¿ Syria's vital oil industry is breaking down as rebels capture many of the country's oil fields, with wells aflame and looters scooping up crude, depriving the government of much needed cash and fuel for its war machine against the uprising.

Exports have ground practically to a standstill, and the regime of President Bashar Assad has been forced to import refined fuel supplies to keep up with demand amid shortages and rising prices. In a sign of the increasing desperation, the oil minister met last week with Chinese and Russian officials to discuss exploring for gas and oil in the Mediterranean off Syria's coast.

Before the uprising against Assad's regime began in early 2011, the oil sector was a pillar of Syria's economy, with the country producing about 380,000 barrels a day and exports â¿¿ mostly to Europe â¿¿ bringing in more than $3 billion in 2010. Oil revenues provided around a quarter of the funds for the government budget.

But production now is likely about half that, estimates Syrian economist Samir Seifan, given the rebels' gains. The government has not released recent production figures.

Since late 2012, rebels have been seizing fields in the eastern province of Deir el-Zour, one of two main centers of oil production. Most recently, they captured the Jbeysa oil field, one of the country's largest, after three days of fighting in February.

At the same time, overburdened government troops have had to withdraw from parts of the other main oil center â¿¿ the northeastern Kurdish-majority region of Hassakeh, where they have handed control of the oil fields to the pro-government militia of the Kurdish Democratic Union Party, or PYD. Production from some of those fields still goes to the Syrian government, but the fields are more vulnerable to theft and smuggling.

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